Years ago, I found myself sitting in law school in Moot Court wearing an oversized itchy blue suit. It was a horrible experience. In a desperate attempt to avoid anything like that in the future I enrolled in a tax course. I loved it. I signed up for another. Before I knew it, in addition to my JD, I had a LL.M Taxation. I needed only to don my cape…. taxgirl® was born. Today, I live and work in Philadelphia, PA, one of the best cities in the world (I can't even complain about the sports teams these days). I landed in the City of Brotherly Love by way of Temple University School of Law. While at law school, I interned at the estates attorney division of the IRS. At IRS, I participated in the review and audit of federal estate tax returns. I even took the lead on a successful audit. At audit, opposing counsel read my report, looked at his file and said, “Gentlemen, she’s exactly right.” I nearly fainted. It was a short jump from there to practicing, teaching, writing and breathing tax.

Back To School: Taking Advantage Of The Tuition & Fees Deduction

(UPDATE: The giveaway is now closed. We have a winner! See the comments for more info.)

It’s Back To School Week on the blog!

Over the past week, I’ve focused a lot on credits for education. This is because, as a rule, credits tend to be more favorable than deductions for two reasons:

1, Credits are a dollar for dollar reduction in the tax due, compared to deductions which merely reduce your taxable income; and 2, Deductions may often only be claimed if you itemize – and only about a third of taxpayers itemize on their federal income tax returns.

I’m still almost always going to tout credits over deductions. But in the case of the tuition and fees deduction, the deduction is worth a second look.

There are a few things about the tuition and fees deduction that make it appealing.

First, it’s not an itemized deduction. You can claim the deduction on your federal income tax return as an “above the line” deduction on the front page of your federal income tax return. Since it’s an adjustment to income, no Schedule A is necessary.

Two, you can take the deduction even if you also relied on the assistance of a loan, tax-free scholarship, fellowship, or grant money, a Coverdell education savings account, tax-free savings bond interest or employer-provided education assistance. Just be sure not to double-dip: you can’t include expenses paid for as part of a tax-free portion of a distribution from a Coverdell account or a tax-free earnings from a qualified tuition program (QTP); tax-free interest on U.S. savings bonds or other tax-free educational assistance. As a quick example, let’s say you took a $5,000 distribution from your Coverdell account to help you pay your $8,000 tuition bill. The Coverdell funds don’t disqualify you from taking the deduction but you must reduce your expenses used to calculate the deduction by the amount of the Coverdell funds: include $3,000 ($8,000 less $5,000) as expenses for purposes of the deduction.

Third, the amount of the deduction is significant: you can reduce the amount of your income subject to tax by up to $4,000 so long as your modified adjusted gross income (MAGI) is not more than $80,000 ($160,000 if filing a joint return).

The deduction is available for qualified tuition and related expenses that you pay for yourself, your spouse, or a dependent. You cannot claim the tuition and fees deduction if your filing status is married filing separately or if you may be claimed as a dependent on someone else’s return (this is true even if the other person does not actually claim you on their return).

For purposes of the tuition and fees deduction, qualified education expenses are tuition and related expenses required for enrollment or attendance at an eligible educational institution (any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education). Related expenses are defined as student-activity fees and expenses for books, supplies, and equipment if the fees and expenses must be paid to the institution as a condition of enrollment or attendance.

Qualified education expenses do not include amounts paid for insurance, medical expenses, transportation, room and board and similar personal, living, or family expenses – even if the payment of these expenses are a condition of enrollment or attendance.

But a student still has to eat, right? And that brings us to today’s giveaway!

NatureBox is offering one lucky reader a 3-month complimentary subscription to their Deluxe box, valued at $19.95 each month ($59.85 total value).

NatureBox, which delights its customers with an assortment of delicious and distinctive healthy snack foods as part of a monthly service, offers students the opportunity to easily enjoy tasty snacks as they head back-to-school. Taking the guesswork out of snacking, so they can focus on their studies, these wholesome snack boxes contain approximately 20 servings of five individual, carefully sourced and nutritionist-approved items that are delivered right to their doorstep each month, making better-for-you snacking easier than ever. With unique and tasty foods-inspired by NatureBox customers to suit their on-the-go lifestyles-students will always be pleasantly surprised! Students even have the option to tailor for special dietary considerations, from low-fat and soy-free to gluten-free options like the sweet-but-not-too-sweet Mango Almond Bites. Monthly cost is just $19.95, without an initiation cost and a full guarantee-if you don’t like a particular snack or the box, you can get free replacements; further, students can start or stop the subscription at any time-whether they receive the box for just a month, a semester, etc.. As an aside, the subscription box industry is booming-from Birchbox for cosmetics, BarkBox for pet supplies, and NatureBox for healthy snacks, so this is right on-trend.

(And even if you don’t win, NatureBox is offering a custom coupon code to my readers for 50% off their first box. Just pop over to the web site and use the coupon code FORBES to get your discount. The discount expires on December 9, 2013, so don’t dawdle!)

To enter to win, just post a comment telling me what every poor student wants to see most in their mailbox from home. I’ll go first to get you started: Snickerdoodles from my mom.

Entries must be posted in the comments section for this blog post in the space below by 9:00 p.m. EST on September 10, 2013. It’s just that easy. I’ll choose the winner randomly (using a number generator) out of all of the qualifying entries.

Post Your Comment

Post Your Reply

Forbes writers have the ability to call out member comments they find particularly interesting. Called-out comments are highlighted across the Forbes network. You'll be notified if your comment is called out.